Under the Kyoto Protocol,
industrialised countries are required to reduce their emissions of
greenhouse gases. The Kyoto Protocol envisages market-based "flexible
mechanisms". These allow industrialised countries to meet their targets
by trading emission allowances between themselves, and also by gaining
credits for emission-curbing projects in developing countries.
The Clean Development Mechanism
(CDM) covers such projects in countries without targets, i.e.
developing countries. Credits will only be issued for reductions if a
project provides real, measurable and long-term climate change
benefits.
Credits issued under Joint
Implementation (JI), joint projects between industrialised countries
with Kyoto targets, are called ERUs (Emission Reduction Units).
The rationale behind these CDM and JI mechanisms
is that greenhouse gas emissions are a global problem and that the
place where reductions are achieved is of less importance. Because of
this, reductions can be made where costs are lowest, at least in the
initial phase of combating climate change.
What are CERs?
Why would I want CERs?
How much will my CERs be worth?
Market Watch: CER market report